Frequently Asked Questions
About the Mastercard Foundation Africa Growth Fund
What is the Mastercard Foundation Africa Growth Fund?
The Mastercard Foundation Africa Growth Fund (the Fund) is a first-of-its-kind Fund-of-Funds (FoF) initiative created to anchor Africa-focused and domiciled investment vehicles (IVs) led by emerging and first-time fund managers with the capital and business development services (BDS) needed to meaningfully invest in gender-equitable small and medium-sized enterprises (SMEs) and increase the job-creation potential of African entrepreneurs.
The Fund is guided by gender-lens principles. We are committed to making a contribution to a gender lens investing ecosystem with significant opportunity to address the biases, and shift power dynamics and norms in investment processes that currently constrain the ability that women and youth have to access and benefit from appropriate capital.
The initiative is a USD$200 million FoF, the largest in its class focusing on a gender-lens investing approach. We are appreciative of MEDA’s USD$5m contribution towards the Learning and Dissemination agenda of the initiative. The initiative will invest USD$150 million in Africa-focused and domiciled IVs led by emerging and first-time fund managers targeting SMEs in sub-Saharan Africa, alongside USD$50 million in BDS to de-risk and strengthen IVs and their portfolio companies, support for gender-lens investing (GLI), results measurement and learning, as well as administrative expenses.
How does the FoF work?
The primary challenge addressed by the Fund is the lack of finance and support faced by Africa-focused and domiciled IVs led by emerging and first-time fund managers. Our mandate is to de-risk these IVs and fund managers by providing much-needed access to finance and technical assistance in order to close the funding and knowledge gap they experience, with significant impact on the SMEs they manage. The aim of our approach is to contribute a solution to the challenge of job creation and decent, fulfilling employment. The initiative’s support extends to first time and emerging IVs domiciled on the continent and legally structured to align with the efficient implementation of their investment thesis.
The Fund’s goals align with the Mastercard Foundation’s Young Africa Works strategy, which will ensure 30 million young people in Africa, particularly young women, secure dignified and fulfilling work. Through its innovative approach, the Fund also aims to significantly contribute to shaping the engagement of the impact investing ecosystem in Africa.
Who can receive funding?
The IVs funded by the Fund are chosen based on our investment policy and other eligibility criteria. These IVs also share our commitment to a gender-lens approach. The Fund is sector agnostic with a focus on the Agribusiness, Light Manufacturing, Education, Health, Technology & Innovation, Hospitality and Tourism industries, in urban or rural environments. They are committed to working with us to change the status quo where IVs are often not interested in early-stage ventures.
We are challenging the traditional way of structuring IVs for major economic and social impact. Our funding will be approved through an independent investment committee, and disbursed as debt, equity, quasi-equity, or other suitable combinations of investment instruments.
Can SMEs apply for finance directly from the Fund?
We recognise that entrepreneurs play a critical role in creating employment opportunities in Africa. The FoF provides access to capital and BDS to Africa-focused and domiciled IVs led by emerging and first-time fund managers in our portfolio to be deployed into gender-equitable SMEs that have a high potential to create jobs. The IVs we invest in and their portfolio companies are guided by gender-lens principles.
SMEs will access funding directly from the IVs and not from the Fund.
What are the eligibility criteria to receive funding?
The Fund will consider IVs that meet the following criteria:
- Invest in Sub-Saharan SMEs with a ticket size of between US$50K to US$4M.
- The majority of the investment team is based in Sub Saharan Africa including at least one partner/CIO-level member based on the continent who is part of the decision-making).
- Invest in a diversity of sectors, if the job-creation mandate is satisfied. Priority sectors include manufacturing, agribusiness, education, health, technology and tourism and hospitality.
- Include an impact focus in the investment strategy defined as solving a key gap in the investment ecosystem, which enables the vehicle to achieve additional job creation and generate additional income opportunities in the value chains of its portfolio companies, including for women and young people, especially young women.
- Demonstrate financial viability by attracting other forms of capital, including private capital.
What impact does the Fund hope to achieve?
Job creation and income opportunities will be the key impact indicators for the Fund, and will include issues of job quality (formalization, job security, access to training, healthcare and other essential services) and capital efficiency (number of jobs created compared to fund size). This is particularly important for tech-enabled seed funds, which will need to demonstrate the strong job creation potential of their positioning. The Fund’s goals align with the Mastercard Foundation’s Young Africa Works strategy, which will ensure 30 million young people in Africa, particularly young women, secure dignified and fulfilling work.
What organizations are part of the Fund consortium and what are their roles?
The Fund is an initiative by the Mastercard Foundation and a consortium of partners led by the Mennonite Economic Development Associates (MEDA), including Investisseurs & Partenaires (I&P) as the technical partner and fund advisor, and ESPartners (ESP), supporting the BDS component of the initiative. As extensions to MEDA’s role, Genesis Analytics works as the Learning Partner Organization (LPO), Criterion Institute as the Gender Equity, Diversity and Inclusion (GEDI) advisor and Africa Communications Media Group (ACG) leads on implementing the Fund’s communications strategy.
What is the role of the Investment Committee?
The Investment Committee (IC) is responsible for a two-stage process: i) screening proposed IVs, and ii) reviewing the due diligence and recommending investments to the Foundation Council (FC) based on the propositions of the Fund Advisor, I&P. The IC will make these recommendations based on due diligence and alignment with the Fund strategy and Investment Policy. In addition to making recommendations, the IC will monitor the performance of the Fund and review the diversity within the portfolio to ensure that the goals of the initiative to invest in female-led and gender-diverse IVs are being achieved. Periodically, the IC will review the Investment Policy, guidelines, structure, approach and effectiveness of the Fund investment function and make recommendations for changes if needed.
The Fund has engaged a stellar IC made up of Africa’s best and brightest financial and investment experts. It includes Hamdiya Ismaila, General Manager at Venture Capital Trust, Kanini Mutooni, savvy investment leader, Dr. Frank Aswani, CEO of the African Venture Philanthropy Alliance (AVPA), Lumka Mlambo, fund principal at the SA SME Fund, and Mercy Mutua, Head of Access to Finance at the Mastercard Foundation.